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PROJECT MONITORING &CONTROL

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Project Monitoring and Control

Why do we monitor? What do we monitor? When to we monitor? How do we monitor?

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Why do we monitor?

Simply because we know that things don’t always go according to plan (no matter how much we prepare)

To detect and react appropriately to deviations and changes to plans

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What do we monitor?

Men (human resources)

Machines Materials Money

Space Time Tasks Quality/Technical

Performance

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What do we monitor?Inputs Time Money Resources Material Usage Tasks Quality/Technical

Performance

Outputs

Progress

Costs

Job starts

Job completionAlso

- Monitor Changes (design spec)

- Quality performance

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When do we monitor?

End of the project Continuously Regularly Logically While there is still time to react As soon as possible At task completion At pre-planned decision points (milestones)

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Where do we monitor?

At head office? At the site office? On the spot? Depends on situation and the ‘whats’

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How do we monitor Through meetings with clients, parties involved in

project (Contractor, supplier,etc.) For schedule – Update CPA, PERT Charts, Update

Gantt Charts Using Earned Value Analysis Calculate Critical Ratios Milestones Reports Tests and inspections Delivery or staggered delivery PMIS (Project Management Info Sys) Updating

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Meetings – Some monitoring issues

What problems do you have and what is being done to correct them?

What problems do you anticipate in the future? Do you need any resources you do not yet have? Do you need information you do not have yet? Do you know anything that will give you schedule

difficulties? Any possibility your task will finish early/late? Will your task be completed under/over/on budget?

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Project Control Cycle

PLANSpecificationsProject ScheduleProject budgetResource planVendor contracts

MONITORRecord statusReport progressReport cost

COMPARE

Actual status against plan

-Schedule

-Cost

ACTION

Correct deviations from plan

RE-PLAN as necessary

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Project Control

Control – process and activities needed to correct deviations from plan

Control the triple constraints – time (schedule)– cost (budget, expenses, etc) – performance (specifications, testing results, etc.)

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Techniques for control

Earned Value Analysis Critical Ratio

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Earned Value Analysis

One way of measuring overall performance using an aggregate performance measure - earned value

Earned value of work performed for those tasks in progress obtained by multiplying the estimated percent completion for each task by the planned cost for that task

If total value of the work accomplished is in balance with the planned (baseline) cost, then top mgmt has no particular need for a detailed analysis of individual tasks

Earned value concept – combines cost reporting & aggregate performance reporting into one comprehensive chart next page)

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Earned Value Chart – basis for evaluating cost & performance to date

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Earned Value Analysis - Variances

4 types of variances; time variance – subtract the actual time from the time

scheduled for the value completed spending variance – actual cost less value completed schedule variance – value completed less the

baseline plan total variance – sum of the latter two;

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Earned Value Variance - Calculations

Spending variance = actual cost – value completed

+ Schedule variance = value completed – baseline cost

= Total variance = actual cost – baseline cost

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EXAMPLE

A project at day 70 exhibits an actual cost of RM 78,000, a scheduled cost of RM 84,000, and a value completed of RM 81,000. What are the total variance, spending variance, and schedule variance. Estimate the time variance.

Day 70

RM Baseline – scheduled cost – 84,000

Actual cost – 78,000

Value completed – 81,000

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Solution

Spending variance = actual cost – value completed + Schedule variance = value completed – baseline cost = Total variance = actual cost – baseline cost

Spending variance = 78,000 – 81,000 = -3,000 (Cost under run)Schedule variance = 81,000 – 84,000 = -3,000 (behind schedule)Total variance = 78,000 – 84,000 = -6,000

Estimated Time variance = Schedule variance/(slope of Scheduled cost)= -3,000/ [84,000/70 days]= - 2.5 days (behind schedule)

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Critical ratio Sometimes, especially large projects, it may

be worthwhile calculating a set of critical ratios for all project activities

The critical ratio isactual progress x budgeted cost

scheduled progress actual cost

If ratio is 1 everything is probably on target The further away form 1 the ratio is, the more we may

need to investigate

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Critical ratio exampleCalculate the critical ratios for the following activities and indicate which are probably on target and need to be investigated.

Activity Actual progress

Scheduled Progress

Budgeted Cost

Actual cost

Critical ratio (CR)

A 4 days 4 days 60 40

B 3 days 2 days 50 50

C 2 days 3 days 30 20

D 1 day 1 day 20 30

E 2 days 4 days 25 25

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Critical ratio example

Can be on schedule and below budget (Act A) Why so good? Cutting corners?

Can be behind schedule but below budget (Act C)

Can be on budget but physical progress lagging (Act E)

Can be on schedule but cost running higher than budget (Act D)

On budget ahead of schedule (Act B)

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Summary

Need proper project monitoring and control mechanisms

Tools available to help in monitoring and controlling activities

There are human control and management aspects not covered here